Finding a system for cannabis banking in Puerto Rico

The local financial system in Puerto Rico is governed by federal law. Until cannabis is no longer considered a narcotic, cash will continue to be used to process payment transactions at medical cannabis dispensaries. This makes total visibility of sales transactions and taxation impossible. The lack of security in cash transactions is the greatest concern of the country’s economic sector.

Getting a system for cannabis banking in Puerto Rico seems to be a long way off, at least until federal law excludes cannabis from the list of illegal substances.

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The cannabis
banking problem in Puerto Rico

“The problem remains that cannabis is a controlled substance. Although it is allowed in nearly 40 jurisdictions in the United States with a strict regulatory framework and the Federal Government tends not to interfere,” said George Joyner, commissioner of the Office of the Commissioner of Financial Institutions.

The local financial system is governed by federal
laws. Until cannabis is no longer considered a narcotic, cash will continue to
be used for cannabis banking and to process payment transactions at medical
cannabis dispensaries on the island. This makes total visibility of sales
transactions and taxation in the Treasury Department impossible.

“We have already issued regulations for
financial institutions and cooperatives, but the challenge is access. Puerto
Rico uses the New York Federal Reserve for wire transfers and unlike other
regions, this is the most conservative. It has been reluctant to allow cannabis
banking. There is a federal directive,” Joyner added.

Cannabis
remains a high-risk drug in the United States

Cannabis is still seen in some regions of the United States as a high-risk drug, making it harder for the market to grow. (Source)

Zoime Alvarez, Executive Vice President of the Puerto Rico Banking Association, stressed that local banks must comply with federal laws and that the possession and distribution of cannabis substances continue to be illegal. This makes cannabis banking nearly impossible.

The Controlled Substances Act of 2012 states that cannabis use and possession is a “Class 1” federal crime. Since it is understood that there is a risk of abuse and it is not considered acceptable to use it under medical supervision.

Under federal law, a prescription for medical cannabis is prohibited, although it is not a priority for the U.S. Department of Justice.

“The Act criminalizes all types of banking services that have a high risk of being charged with money laundering. On the other hand, we are very concerned about the security of this business and the bank is requesting that this cannabis banking problem be addressed quickly. It is time for Congress to take action and provide legal clarity on how the bank should operate this type of business,” he said.

The greatest concern for the economic sector

The lack of security in cash transactions and the
lack of a clear outlook for the economic operation of this type of company is
the greatest concern of the country’s economic sector.

Teresita Santiago, president of the Medicinal
Cannabis and Hemp Committee of the Puerto Rico Chamber of Commerce (CCPR),
added that apart from the serious problem of security in cash transactions,
Puerto Rico must address issues as important as whether or not companies should
allow their employees to use medical cannabis.

For the Puerto Rican authorities, a clear perspective and security in cash operations are their main concerns. (Source)

Society and laws still haven’t evolved

“We haven’t evolved, we haven’t taken care of the labor part that is very important. Business owners prepare payroll and social security forms in cash. They must pay for everything in cash. There is a law that says that you should not have more than $10,000 in cash in your home and the Treasury is not prepared to receive these large sums of money. Business owners are risking their lives. There is a lock on decision-makers. You can’t put beliefs first, but what’s best for the industry,” said Santiago.

Article 90 of the Regulations of the Department of
Health of Puerto Rico provides that it does not authorize patients to use
medical cannabis in their workplace unless authorized by the employer.

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First published in El Vocero, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Anthony Donaghue writes about science and technology. Keeping abreast of the latest tech developments in various sectors, he has a keen interest on startups, especially inside and outside of Silicon Valley. From time to time, he also covers agritech and biotech, as well as consumer electronics, IT, AI, and fintech, among others. He has also written about IPOs, cannabis, and investing.

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